No New York City Building Used the Local Law 97 Storage Deduction in the Law’s First Compliance Year

Seventy-nine New York City properties used Affordable Housing Reinvestment Fund offsets to comply with Local Law 97 in its first enforcement year. Thirty-one used solar credits, ten used combined heat and power, six used beneficial electrification credits. The onsite and offsite energy storage deduction recorded zero.

Urban Green Council published a year-one progress report this week drawing on the city’s first-year compliance data. It counts 29,031 buildings required to report under Local Law 97, a 95 percent filing rate, and 95 percent of filers inside their emissions limits.

The pathway was live. The Department of Buildings created the onsite and offsite storage deduction through Buildings Bulletin 2025-014, issued December 8, 2025. That places the pathway roughly nine months into its existence and legally available, with a usage count of zero.

The timing matters for how the zero should be read. The bulletin was issued well after the year-one reporting cycle was underway, so a first-year number was never going to capture buildings responding to it. What the number does establish is that the storage route carried no incumbent users into the period when it became fully available.

The instruments that saw use require no new equipment. The Affordable Housing Reinvestment Fund is a payment. Solar credits and CHP deductions attach to systems that covered buildings, in most cases, already owned before Local Law 97 took effect. Beneficial electrification credits follow from equipment changes a building may have been making for other reasons.

Storage is the only instrument on the used-and-unused list that requires a covered building to procure a new asset, site it inside a dense urban structure, pass fire and electrical review, commission metering, and operate it against peak hours across a full reporting year before any deduction accrues. The others clear on paper.

Enforcement volumes were low relative to the building count. The city issued 1,014 notices of deficiency for failure to file and 164 for emissions violations, and collected $270,000 against a penalty rate of $268 per metric ton of carbon dioxide equivalent above allowance. Four hundred seventy properties exceeded their limits, 197 of them by between 10 and 50 percent.

Set against 29,031 covered buildings, $270,000 in collections is a rounding error. That is the arithmetic behind the compliance result: the first-period limits were loose enough that 95 percent of filers cleared them without reaching for the alternative compliance menu at all.

The 2030 step-down changes the calculation. The next compliance tier requires a 40 percent emissions cut. Offsets and credits are finite in supply and priced against demand that has not yet materialized. When several thousand properties are simultaneously short of a 40 percent reduction rather than a few hundred short of a modest one, the instruments that scale without physical intervention are the ones that run short first.

That is the window in which the storage deduction becomes load-bearing rather than theoretical. Whether it gets used depends in part on a variable the Department of Buildings does not control.

Siting rules move on a separate track. New York Senate Bill S7197B, sponsored by Senator Joseph Addabbo Jr. and amended to its current form on February 11, 2026, would require setbacks of no less than 750 feet from occupied dwellings, farm buildings and schools for commercial battery energy storage systems of three megawatts or greater, reduced to 300 feet in cities above one million population. For New York City specifically, the bill directs the commissioner to establish a minimum 300-foot setback from residential property and requires a public hearing in the affected community district before any permit approval. Mechanical and thermal storage are excluded.

The three-megawatt floor is the operative number. Three megawatts is well above typical single-building behind-the-meter installations, which suggests the threshold is aimed at larger shared or offsite configurations rather than equipment inside a covered building. On that reading, the bill as drafted would leave building-scale systems untouched while making the offsite variety substantially harder to site: a 300-foot residential setback in Manhattan or downtown Brooklyn eliminates most candidate locations, and a discretionary community-district hearing removes schedule certainty from whatever remains.

Two bodies are writing on different clocks. The Department of Buildings spent December 2025 creating a storage pathway into Local Law 97 compliance. Albany spent February 2026 advancing a bill that would constrain where the larger end of that storage can go in the city where the limits apply.

What year two tests. The 2025 compliance year is the first reporting cycle conducted entirely after the December bulletin. It will produce the first number that measures the pathway under its current terms rather than before them, and it arrives four years ahead of the step-down that determines whether the pathway matters.

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